While plenty of high-yield opportunities exist, investors must always consider the safety of their dividend and the total return potential of their investment. It is not uncommon for a struggling company to suspend high-yielding dividends which could subsequently result in precipitous share price declines.
TheStreet Ratings' stock rating model views dividends favorably, but not so much that other factors are disregarded. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e. how much one is willing to risk in order to earn profits?; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to its stock's performance.
These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. As always, stock ratings should not be treated as gospel — rather, use them as a starting point for your own research.
The following pages contain our analysis of 3 stocks with substantial yields, that ultimately, we have rated "Buy." Liberty Property Dividend Yield: 5.20% Liberty Property (NYSE: LPT) shares currently have a dividend yield of 5.20%. Liberty Property Trust is a publicly owned real estate investment holding trust. Through its subsidiary, it provides leasing, property management, development, acquisition, and other tenant-related services for a portfolio of industrial and office properties. The company has a P/E ratio of 30.59. The average volume for Liberty Property has been 918,300 shares per day over the past 30 days. Liberty Property has a market cap of $5.4 billion and is part of the real estate industry. Shares are down 2.5% year-to-date as of the close of trading on Wednesday. EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE. TheStreet Ratings rates Liberty Property as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, impressive record of earnings per share growth and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 8.4%. Since the same quarter one year prior, revenues slightly increased by 7.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Net operating cash flow has increased to $89.98 million or 22.09% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -0.03%.
- LIBERTY PROPERTY TRUST has improved earnings per share by 23.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, LIBERTY PROPERTY TRUST increased its bottom line by earning $1.15 versus $0.70 in the prior year. For the next year, the market is expecting a contraction of 12.2% in earnings ($1.01 versus $1.15).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, LIBERTY PROPERTY TRUST's return on equity is below that of both the industry average and the S&P 500.
- You can view the full Liberty Property Ratings Report.
- HCN's revenue growth has slightly outpaced the industry average of 8.4%. Since the same quarter one year prior, revenues rose by 10.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- HEALTH CARE REIT INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, HEALTH CARE REIT INC increased its bottom line by earning $1.40 versus $0.09 in the prior year. This year, the market expects an improvement in earnings ($1.91 versus $1.40).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 212.1% when compared to the same quarter one year prior, rising from $66.38 million to $207.15 million.
- You can view the full Health Care REIT Ratings Report.
- OHI's revenue growth has slightly outpaced the industry average of 8.4%. Since the same quarter one year prior, revenues rose by 10.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- OMEGA HEALTHCARE INVS INC's earnings per share declined by 28.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, OMEGA HEALTHCARE INVS INC increased its bottom line by earning $1.74 versus $1.46 in the prior year. This year, the market expects an improvement in earnings ($1.77 versus $1.74).
- The gross profit margin for OMEGA HEALTHCARE INVS INC is rather high; currently it is at 64.47%. Regardless of OHI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, OHI's net profit margin of 32.22% compares favorably to the industry average.
- In its most recent trading session, OHI has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Real Estate Investment Trusts (REITs) industry average. The net income has decreased by 22.9% when compared to the same quarter one year ago, dropping from $55.83 million to $43.05 million.
- You can view the full Omega Healthcare Investors Ratings Report.
- Our dividend calendar.